Support and resistance levels are price levels on charts from past activity that can be used to determine market entry and exit points for individual stocks. Technical traders believe the market follows patterns, and those patterns can be used to help the trader. One thing to keep in mind is that technical traders do not believe using support and resistance levels will always work; however, using the theory may aid your trading strategy.
A support level is a price level where a stock tends to linger, or find support, as the price drops. You may see this with certain stocks you're monitoring - the stock price hovers around a particular price on down days. If the stock price drops below this support level, it may continue to drop until the stock finds another support level.
A resistance level is a price level where a stock lingers as the price increases. The stock price may hover around an upper price level but not pass through it, indicating "resistance" to further price increases. If the stock price does pass through the resistance level this is referred to as a breakout - which could potentially continue until the next resistance level is reached.
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